The yen dipped briefly today after US President Mr George W. Bush caused some consternation in the foreign exchange markets by saying he had discussed "devaluation" with Japanese Prime Minister Mr Junichiro Koizumi.
Replying to questions at a joint news conference, Mr Bush said: "He [Koizumi] said I want to make it very clear to you exactly what I intend to do and he talked about non-performing loans, the devaluation issue and regulatory reform and he placed equal emphasis on all three".
When the word "devaluation" popped up on dealing screens, it was enough to the send the dollar up to 132.80 yen from 132.55 as dealers wondered if this meant the United States was prepared to tolerate a much weaker yen.
However, traders going over the full answer said it sounded like Bush was actually talking about "deflation" rather than "devaluation" and the dollar faded back to 132.62.
"We're assuming he didn't mean to use the word devaluation, but we would like someone to get the White House to clarify the comment," said a US bank dealer.
"He's like his dad in being a bit loose in his terminology sometimes," he said.